New York Gov. Andrew Cuomo has pushed ahead to make his state the leader in the new push to tighten gun laws. The governor's thinking offers a glimpse at what other states and the federal government might do, and helps to refine the outlook for the nation's $32 billion gun industry.

Cuomo and a strikingly bipartisan group of state legislators say they're close to a bill that would ban assault weapons and large magazines and establish new measures to avoid firearms falling into the hands of the mentally ill.

The governor's exact language is particularly important. He has branded semi-automatic rifles, the type of weapon used in the Newtown, Conn., massacre, as assault weapons. This will surely displease Second Amendment advocates, as well as the gun industry: Gun companies like to label semi-automatics as modern sporting rifles, an attempt to distance their guns from the very connotations that Cuomo is placing on them.

A modern sporting rifle sounds like something you meet use to hunt. An assault weapon sounds wicked. This is not lost on Cuomo.

"No one hunts with an assault rifle. No one needs ten bullets to kill a deer," he said in his State of the Union.

Cuomo and legislators would like New York's law to mirror California's, making those two states the toughest on guns in the nation. New York lawmakers would limit detachable magazines to seven rounds from today's 10 rounds, and make background checks necessary for ammunition as well as guns.

The White House intends to lead its own efforts to broaden restrictions on firearms. It's unclear whether the administration would opt for something as tough as Cuomo's proposals. "The president and I are determined to take action," said Vice President Joe Biden, who is leading the White House's anti-violence task force. "This is not an exercise in photo opportunities."

These early signals of a harsh reality for semi-automatic rifles hits the Freedom Group hardest. Freedom Group, a roll-up of several gunmakers—including Bushmaster, the company that made the rifle used in Newtown— owned by Cerberus Capital, is the nation's largest manufacturer of rifles. Before now, Freedom Group was counting heavily on the rising interest in semi-automatic rifles: After sales rose by 23.4% in the third quarter, Freedom Group noted: "These increases were primarily the result of strong market demand for modern sporting products, as well as volumes associated with our handgun introductions and our new shotgun offerings." Meanwhile, Freedom Group noted a decrease in sales of traditional rifles.

Semi-automatic rifles are sold not only in small-town gun shops, but at major retailers. Indeed, the world's largest retailer is America's largest gun-seller: Wal-Mart lists 10 different modern sporting rifles on its website. Other major retailers include Dick's Sporting Goods and Cabela's. The impact of any new legislation would injure the sporting goods stores more than Wal-Mart; simply the size of Wal-Mart's business ensures it could absorb the hit.

As for America's other two big gunmakers, Smith and Wesson and
Sturm, Ruger, they have been propelled more by the increased demand for small pistols that fit concealed carry laws than by semi-automatic rifles. "I would characterize that most of the growth in new products for us has been in handguns, but that's what we've been introducing. You know that's where all the new products have been coming from," Ruger CEO Mike Fifer said on a conference call with analysts.